Transportation refers to the physical distribution of finished goods, from the place of production to the place of final consumption. It also includes the transportation of raw materials to the place of production. Logistics aims at reducing the cost incurred during transportation by employing scientific methods and customized software.

Transfer of raw material and finished goods can be done through roads, railways, airways, sea routes, canals and high capacity pipelines. The selection of a particular medium depends on the nature of the product and its shelf life. Perishable goods like flowers, fruits and vegetables need a faster medium of transportation like air and road. Ships are used to transport items like metal, crude oil etc.

The reduction of transportation costs is calculated by selecting the shortest distance between two points and the time taken to travel. Goods are now tagged with Radio Frequency Identification (RFID) tags to keep track of their location. Even trucks are fitted with GPRS systems to help drivers find the destination in time.

Logistics companies use transportation software to make the most efficient use of their existing fleet of trucks, ships, and cargo planes. They also help other companies by providing them with technical expertise and customized systems that improve efficiency. Transportation is important especially for large multinational companies. Products of these companies traverse large distances over land, sea and air to reach their place of consumption.

With the growth and acceleration of the global economy, the freight transportation industry faces greater challenges and demands. Extensive research on transportation and logistics is carried out on a regular basis. A new research is studying the natural ability of ants to find the shortest route between two points. Institutions like the American Society of Transportation and Logistics help companies improve their supply chain and reduce their transportation costs.